Insulation firm fails, jobs lost

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A major player in the Government's home insulation scheme has gone into liquidation, leaving more than $1 million in outstanding bills.

Wellington-based EnergySmart's liquidation has thrown suppliers into turmoil, with Christchurch company Terra Lana having to lay off five of its 20 staff.

Suppliers are angry that the company's owner, Hutt Mana Charitable Trust, has more than $30m in assets but has chosen to walk away without paying its bills.

Mike Underhill, chief executive of the Energy Efficiency and Conservation Authority, which runs the Government's Warm Up New Zealand scheme, said he was "appalled".

Behind the scenes, however, EECA is warning its contractors not to speak to the media.

EECA also admitted that late last month it advanced EnergySmart contract money for work already undertaken, because EnergySmart needed to pay a supplier.

EnergySmart, which has offices in Wellington, Masterton, Palmerston North, Nelson, Timaru, Dunedin and Invercargill, is one of the $347m scheme's larger providers, having carried out five per cent of the 115,000 retrofits across the country since it began in June 2009.

The company's turnover in 2009/10 was $13.6m, but it made a loss of $750,000.

HMCT paid more than $500,000 for EnergySmart five years ago and injected $750,000 in 2009.

Liquidator Chris Dunphy said all but four of the company's 79 staff were offered short-term contracts. The business was advertised for sale last Wednesday.

Terra Lana managing director Andrew Everist wept as he explained his company was owed $527,000.

He said as late as last week EnergySmart was still placing orders for insulation material and the company had given suppliers assurances that the company was still "trading OK" and "banking work" for further financing was progressing, he said.

Another supplier, Auckland-based InsulPro Manufacturing, which employs more than 50 staff, is owed about $500,000.

InsulPro general manager Murray Page said EnergySmart's arrears stretched back about 12 months and its directors and senior managers had behaved deplorably by giving assurances it was turning around.

EnergySmart's previous owner, Peter McKeown, who started the company in a downstairs bedroom with wife Robyn in 1997, said when the business was sold to the trust five years ago it had hundreds of thousands of dollars in the bank and strong future contracts.

EnergySmart directors include Hutt city councillor Roger Styles and Pat Waite, a former chief executive of the Public Trust. Trust chair Ian Hutchings, a former Wellington city councillor, said EnergySmart had returned "at least two" dividends in five years.

The directors of HMCT Holdings, a holding company owned by the Hutt Mana Charitable Trust, decided to liquidate last week.

"At the level of business they were doing, they needed a significantly increased capital base to service that and in the best interests of our beneficiaries, which are the wider community, we couldn't offer that," Mr Hutchings said.

He said it was unlikely the trust could dip into its former power board assets, held on behalf of Hutt Valley, Porirua and Wellington residents, to pay the company's bills.